Demand recovery has been much faster than we expected: Anuj Jain, ED, Kansai Nerolac

Anuj Jain, Executive Director, Kansai Nerolac, talks about Q3FY21 numbers, orders from the auto industry, CapEx and new launches during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts: 

Q: Congratulations! Kansai Nerolac has posted very good results in for the third quarter. Demand looks strong and do you expect that demand momentum will continue or can better in the future quarters? Also, provide segment-wise breakup and the area that has shown good growth?

A: In the three months - October to December 2020 - our top-line growth stood at 18% and EBITDA has growth by 51%, up 430 basis points. When the lockdown came into force due to the pandemic, then paint recovered on the quarter-on-quarter basis, in which the second quarter was better than the first quarter and the third is better than the second. The consumer has a sensitivity towards the paint about hygiene and cleanliness and this helped the paint.

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The recovery of demand in the market has been much faster than we expected. The fast recovery has also happened on the decorative because the previous results were based on a good growth in the tier-III, tier-IV and small towns, which is still going well. But the weakness in demand in metros and cities that existed earlier has recovered in the third quarter. So, I can say that there has been a recovery from all the sides in the third quarter, hence the third-quarter results are good.

Q: A large portion of your sales comes from the Auto industry and there were talks that the short supply of semiconductors has hit the auto industry hard. How is this impacting your company and is there any decline in orders from OEM?

A: Every company has faced the challenges related to the logistics in this period but fortunately, the company has been able to manage it. If you have a look at the industry body, Society of Indian Automobile Manufacturers (SIAM), then you will find that there has been 17% production growth in the October-December period. The outlook is positive. Logistics, supply chain challenges, semi-conductor, you are talking about is a challenge for them, but I think, companies can manage. 

Q: The company has earlier said that it will invest Rs 450 crore to add capacity by 40,000 lakh litres. Tell us, how much of the CapEx is done and how much is remaining for this year?

A: In the last three years, we have expanded our capacity and at present have a total capacity of around 5.50 lakh litre. And, whatever the market demand or outlook we are seeing, we have placed ourselves well for it. We have invested a good CapEx in the last three-four years and whatever balance part is left will come in this year and will continue to run as a regular CapEx. In terms of capacity, we have already invested a large of our CapEx.

Q: What is the product launch pipeline? The company in around September has launched an antiviral paint. What is an update on it?

A: A lot of products have been launched in the current year, mainly in the last three-four months, like you have talked about the Excel Virus Guard, after that we launched Beauty Gold - Washable anti-bacteria that is cleanability, which is a functional benefit in it. So, we have given its proposition to the customer - Clean & Safe too. Today, you need clean walls, and you need a face wall. So, we have launched this product. We have also launched Suraksha Dust Resist for exteriors. In the economy range, there were some products - that comes under matt-finish or smooth finish - have been launched in the form sheen finish. Under construction chemicals, we have increased our portfolio in the market and have introduced relevant products in the market.